HR7393

The 'Save for Success Act' (HR7393) amends Section 529(c)(3) of the Internal Revenue Code of 1986 to permit tax-free distributions from qualified tuition programs (529 plans) for qualified housing expenses. Specifically, these expenses include the purchase of a principal residence, closing costs, and mortgage payments for first-time homebuyers. A first-time homebuyer is defined as an individual (and spouse, if married) who has not owned a principal residence in the three years prior to the purchase. This directly expands the permissible uses of 529 funds beyond education, making them a more versatile savings vehicle. This legislative change creates a new avenue for funding home purchases, particularly for younger generations who are often the target demographic for 529 plans and first-time homebuyer programs. Financial institutions that administer 529 plans, such as Fidelity (parent company of Fidelity Investments), Vanguard (private, but its mutual funds are widely available through brokers), and T. Rowe Price ($TROW), will see increased attractiveness of their products. Mortgage lenders and banks like JPMorgan Chase ($JPM), Bank of America ($BAC), Wells Fargo ($WFC), and Citigroup ($C) will benefit from a potentially larger pool of qualified buyers with accessible funds for down payments, leading to increased mortgage originations. Homebuilders such as Rayonier ($RYN), Lennar Corporation ($LEN), D.R. Horton ($DHI), PulteGroup ($PHM), and KB Home ($KBH) will experience increased demand for new homes as more individuals gain access to funds for homeownership. Historically, similar expansions of tax-advantaged savings vehicles have led to increased utilization and market activity. For instance, when the SECURE Act 2.0 in December 2022 allowed 529 plans to roll over unused funds into Roth IRAs, it enhanced the appeal of these plans, although direct market impact on specific companies was less immediate and more diffuse than this housing-specific change. The current bill's direct link to housing expenses is more analogous to past first-time homebuyer tax credits or programs, which historically stimulated housing demand. For example, the first-time homebuyer tax credit enacted in 2008 and expanded in 2009 led to a measurable increase in home sales and a stabilization of home prices in the subsequent quarters, benefiting homebuilders and mortgage lenders. While specific stock movements from that period are difficult to isolate due to the broader financial crisis, the underlying principle of increased demand from accessible funds holds. Specific winners include financial services companies managing 529 plans and offering mortgages, such as JPMorgan Chase ($JPM), Bank of America ($BAC), Wells Fargo ($WFC), and Citigroup ($C). Homebuilders like Rayonier ($RYN), Lennar Corporation ($LEN), D.R. Horton ($DHI), PulteGroup ($PHM), and KB Home ($KBH) also stand to gain from increased demand. There are no clear losers, as this bill expands options without restricting existing ones. The bill was introduced on February 5, 2026, and referred to the House Committee on Ways and Means. If passed, the amendment will apply to distributions made after December 31, 2026. The next step is committee consideration, which could involve hearings and markups. Given the bipartisan sponsorship (Rep. Patronis, R-FL, and Rep. Bilirakis, R-FL), it has some momentum, though it is still early in the legislative process.